But a loss for the investors that bought the stock on the open market. So even if you think that's a good thing it will definitely reduce the chance of seeing another pop with the next IPO.
A 'drag down' is never a good thing for a stock.
"Pop" is a function of the gap between what the underwriters pay the company (the offering price), what the underwriters offer the market (the opening price) and what the market offers itself (the first-day closing price).
Lower first-day closing expectations thus mean less "pop", less profit for the bankers and/or a lower offering price for the company. If you believe, as I do, that valuations are touching on frothy, none of those is a bad thing.
Keep in mind that Snap was happy to go public at 14 to 16 a share [1]. Bankers priced at 17, it opened at 24 and then we got this mess.
> A 'drag down' is never a good thing for a stock
It can be healthy for the market if it encourages sustainable practices. That's my point--it's good in the long run.
[1] http://www.usatoday.com/story/tech/news/2017/02/16/snap-pric...
It's a loss for speculators who gambled that it would go up. I'm lacking sympathy for people who snap up stock at IPO and assume it can't possibly drop.
> A 'drag down' is never a good thing for a stock.
It's a great thing for anyone who wants to buy at the lower price.
So, it's very good for investors who invested in the company, i.e. the sorts of people that won't be selling the stock within 2 days of buying it. They'll hold on, and presumably make money in the long run as the values drag down.... and back up beyond the ipo value.
Granted, it'll be years if not decades before SNAP pays a dividend, if it succeeds at all. But on the flip side, SNAP's future dividends could turn out to be worth much more than the current price, even after discounting for risk and the opportunity cost of your capital.
Its only a bad thing if you're trying to short-term game the market with simplistic strategies. And if you're doing that you have worse problems.